Alberta case affirms powers of condo board
A February 2009 decision of the Alberta Court of Queen’s Bench should be added to the list of notable condo cases for 2009. Check out Dykun v. Cravenbrook Condominium Corporation No. 032 1893.
After changing managers on December 1, 2007, the condominium’s board discovered that the previous manager had improperly withdrawn money from the reserve fund to pay operating expenses, leaving the corporation on the brink of insolvency.
Two months later, the board announced that it was levying a special assessment to raise the money necessary for the corporation to continue operating and to replenish the reserve fund.
One unit owner fought tooth and nail to resist paying his $800 share of the $80,000 special assessment. He brought an application against the board and argued that the corporation should have exhausted alternative options before it levied the special assessment. The owner presented one alternative strategy and asked the court to set aside the board’s decision and to implement his suggested strategy.
In dismissing the application, the court found that the board had acted prudently and responsibly in asking and following the advice of the corporation’s solicitors and auditors to levy the special assessment. The court did not agree with this unit owner’s proposed strategy and went on to say:
Even assuming that Mr. Dykun’s solution was an appropriate one, he cannot force his views on the Board of Directors. Management of the affairs of Cravenbrook rests with the board and not with any single unit owner. The Board has been properly elected to oversee Cravenbrook’s affairs. Mr. Dykun has not. Mr. Dykun cannot dictate to the board the course of action that they should be following. If he is interested in having a greater say in how the overall affairs of Cravenbrook should be managed, he should seek election to the board of directors.
This approach seems like a good answer to cases where owners look to second-guess decisions of the elected board. The decision in this case further affirms the concept that the board has the final say in managing the corporation’s business, whether in budgetary matters or in selecting the colour scheme for the corridor refurbishment project.
What do you think?
The judge was quite correct. The more serious problem asks the question, "why did the Board not pay more attention to what was happening with the owners' money?" My own condo board (and I am a member of it) fails to recognize the proper use of Reserve Funds and has diverted sums (not large ones, thank heaven) from the fund for such items as the replacement of four tiles on the deck of the swimming pool and a proposed redecoration of the basement lobby. The latter is certainly not "major replacement or repair" of a common element as mandated by the Ontario Condo Act.
Reserve Funds are not slush funds and boards should use funds that are available or budget accordingly.
The outcome of this case should not be surprising to anyone, should it? While the report is lacking precisely HOW this Board got into this problem in the firt place (where were they with respect to scrutiny of the Manager?) when they 'discovered' that they had a funds problem they did, at least, seek professional advice AND ACTED ON THAT ADVICE.....the additional cost aside. But, of course there is always a 'but'....there are Boards out there that seek professional advice and fail/refuse to follow it.....go figure!
How does one get to those people?